07-09 Didn't Happen, There Was No Crash

[Sybil13]

What % did they crash by?

(seriously...I'm 28 )

What we Can Learn From the Last Housing Crash

'House prices in Britain rose last month, confirming that the slump in the south of England has levelled out, according to the Halifax,' ran the story in The Times. 'The Halifax's latest quarterly survey shows that prices in general rose by 0.5%, and the indications are of a definite bottoming-out'.

The above statements were not made this week or last week. In fact, they were made in October 1990. House prices didn't bottom for another four years. Now, just as then, you should ignore the outbreak of bullish talk across the media on UK house prices. This is a dead cat bounce. .....

House Prices Could Fall Another 40%

....almost no matter how you look at the UK housing market – be that through the UK house price to history ratio; the house price to GDP ratio; the ratio of house prices to other assets, or house prices to earnings – you get the same sort of target fall: 40-50% in real terms. Given that 1989-1996 saw a real-terms drop of nigh-on 40%, that's not so surprising. ...

Boom Bust

The first boom and bust (1971–77) saw prices soar 52 per cent above the trend of inflation plus 2.9 per cent and fall 5 per cent below it. Number two (1978–1982) saw prices rise 19 per cent above the trend and fall 8 per cent below. In number three (1986–1995) prices were 34 per cent above the trend before falling 30 per cent below it.

This time around, in the long boom between 1997 and the third quarter of 2007, prices rose 31 per cent above the trend. The sobering thought is that even after the fastest annual decline ever recorded, they are still 3 per cent above it.

The experience of the last three busts suggests that they have further to fall – possibly much further. The whole point of booms and busts is that they tend to overshoot and undershoot long-term trends........

.....Taking the Nationwide’s figures, the 1997 to 2007 boom saw prices rise by 147 per cent in real terms. Within that, prices rose 76 per cent between 2001 and 2007. In the developing bust, prices have fallen by 18.5 per cent since the third quarter of 2007.

The first boom and bust happened in the early 1970s. From 1971 to 1973, prices rose by 64 per cent in real terms. By the summer of 1977 they had fallen back by 30 per cent. The second happened between 1978 and 1982. Prices rose by 69 per cent between the start of 1978 and mid-1981, then fell 6.3 per cent in the next year. Boom and bust number three came between 1986 and 1995. This saw prices rise by 47 per cent in real terms between 1986 and 1989 and fall back 37 per cent by 1995.

Me the MPC Man and 38% Falls

Blanchflower, writing in the Sunday Telegraph, at the start of August:

'How much further will house prices fall? The best guide is the ratio between average earnings and average house prices. This is a measure of affordability. Between 1983 and 2001, before house prices started to climb, the ratio averaged 3.62. By July 2007 the ratio had reached 5.84; it has subsequently fallen back to 4.33.

'To get back to the long-run average of 3.62 from 5.84 implies a drop of 38%. So far we are down 26%, so it looks like there is more to go. The possibility is that house price falls will be even greater than that if the ratio falls below its long-run trend before recovering, as it did in the early 1990s.

House prices probably have a good way to drop yet. Lots of people may tell you otherwise − estate agents, mortgage brokers and bankers − because they have something to gain. My advice is just to look at the data.'

[IMHAL]

I can tell you first hand that they crashed by 30%, north and south.

[Kazuya]

Around my area, proper houses like terraced, semi and detached have all crashed by atleast 20% since 2007. Thats looking at the sold prices.

[Willy Weasel]

I think the OP's point just proves that we have only just left the 'denial' and 'bulltrap' phases of the cycle. The next phases are 'panic' and 'despair' so the best is yet to come

[roadtoruin]

What % did they crash by?

(seriously...I'm 28 )

Flats in South London up to 60% crash (mine £70K in 1989 down to 30K at bottom), Brighton around 30% drops were just the areas I was living in.

That's why for those of us who were badly affected, this no-crash-in-90's ****** is so annoying.

Yes, OK it was regional, and houses were less affected than flats, and affluent areas less than down-at-heel areas, but please don't think there were no big falls, some of us were well and truly shafted. My flat finally 'broke even' to original price around 2002/3...

[awaytogo]

I am coming to the conclusion that housing never crashed in the previous few years. It was just a damp squib. People still believe in property in a crazy way. People are still happy to lavish hundreds of thousands on flats (a distant in-law's modest 2-bed flat in Hampstead just went for 900K!). Sure, selling prices changed for a bit, but property is still the premier asset class in this country.

The love for bricks and land never went away. The populous doesn't care for boring stuff like "productivity", or "budgets", or "inflation", or "debt", or "pensions timebomb", or "fiscal crisis", or "unemployment". That's too negative and complicated. It's "mortgage available = good, no mortgage available = bad". The naught bankers turned the taps off, spoiling all our fun. How mean of them to pay themselves bonuses while I can no longer get 8x my salary for a BTL. How downright rude.

It's a good thing that the economy will pick up soon, otherwise people really might start to wonder if this property business is all it's cracked up to be.

So the houses i am seeing still on sale in my area after two years and at an asking price 30% less are all in my mind. Will have to go the the doctors.

[stonethecrows]

Joseph Goebbels, Hitler's Nazi Propaganda Minister, stated that to continue to tell folks lies you must shield them from the effects of the lies. This is what you are seeing today. The price of sub-standard crumbling piles of brick has to be seen as "you can't lose" while the currency and everything else goes to shit around it. If the fail, then the key to the globalists plan of life slavery for you (debt) will be challenged. They will fail, as without jobs there will be no buying of houses, without jobs there will be no paying of ridiculous rents, without jobs everything falls apart.

Those with mortgages or life time debt balls and chains, don't realize they are about to be boiled alive as wage deflation does not erode their debts, infact they make them so much worse. Of course, in typical fascist style, they are trying to socialize the suckers mortgages by stupid low interest rates, QE easing, stamp duty holidays, and so on. All this will fail.

The next phase of this collapse will reduce grown men to tears.

Dear Lord, I do believe he finally gets it! Welcome back Pluto.

[Mammon]

Housing has not crashed when measured in UK pounds. However, when measured against other currencies it has declined in price by at least 30%. The powers that be are propping up the nominal price of crumbling UK rabbit hutches by devaluing the currency it is measured in. Even this will fail, as without a job no one is buying, or paying rent for that matter. The globalists want you in debt, that is their plan. They have used their media machine to sucker the fools into believing that you can't go wrong with bricks and mortar. Property as an investment only works when the debt is eroded by wage inflation. There is no wage inflation, and their policy of devaluing the pound will end up sending the economy into a depression as folk cut back on buying imported non essentials as they become more expensive.

Stay tuned as enter a new phase, a phase where houses will be the last thing you will be worrying about.

Against gold UK property has fallen by almost 70%. From a high of almost 700 to a low of 215 this year. Now heading back up...

[awaytogo]

i believe owners feel this stagnation is here to stay, and thats fine as long as wages continue to rise.

which they will not.

The most common saying by property owners is PROPERTY PRICES ALWAYS RISE, they do when wages rise (except for bubbles which come along and burst now and then). Which direction wages will go in the present climate is the big question.

[stonethecrows]

The most common saying by property owners is PROPERTY PRICES ALWAYS RISE, they do when wages rise (except for bubbles which come along and burst now and then). Which direction wages will go in the present climate is the big question.

No it isn't-take a look around you at what is happening and it will become self evident that there is no question at all that wage deflation as well as all out wage loss pervades every corner of the economy. Where we are heading we will be lucky if the job market hits a bottom at 20% unemployment.

[Democorruptcy]

No wage inflation?

Executive pay rises have spiralled out of control and this was a big factor in HPI.

2006 +37%

2005 +28%

2004 +16%

2003 +13%

Using compound rises on those figures each £100k became £230k! 130% in 4 years.

http://www.guardian.co.uk/business/2007/aug/29/executivepay2

Anyone got the figures for 2007 & 2008?

If those at the top of the salary scale pay too much for a house it feeds down the chain, giving the person they buy from more money to buy another.

[Pluto]

No wage inflation?

Executive pay rises have spiralled out of control and this was a big factor in HPI.

2006 +37%

2005 +28%

2004 +16%

2003 +13%

Using compound rises on those figures each £100k became £230k! 130% in 4 years.

http://www.guardian.co.uk/business/2007/aug/29/executivepay2

Anyone got the figures for 2007 & 2008?

If those at the top of the salary scale pay too much for a house it feeds down the chain, giving the person they buy from more money to buy another.

Rubbish.

Executives have been rewarding themselves at the expense of the average worker. The houses these buy are detached from the crumbling pile of bricks the average person buys or rents. There is no trickle down.

http://www.dailymail.co.uk/news/article-51...arder-ever.html

Edited August 21, 2009 by Pluto

[Pluto]

Against gold UK property has fallen by almost 70%. From a high of almost 700 to a low of 215 this year. Now heading back up...

It will head back down again. 100oz for a pile of crumbling UK bricks coming your way soon.

Edited August 21, 2009 by Pluto

[Mammon]

It will head back down again. 100oz for a pile of crumbling UK bricks coming your way soon.

Yeh probably, but gold is more likely to £1500 an ounce than house prices falling much in nominal terms.

[Democorruptcy]

Rubbish.

Executives have been rewarding themselves at the expense of the average worker. The houses these buy are detached from the crumbling pile of bricks the average person buys or rents. There is no trickle down.

http://www.dailymail.co.uk/news/article-51...arder-ever.html

I'm not suggesting an executive will buy a house in the city from someone who will then buy a council house in the industrial North. The person the executive buys from will be more likely to retire to the countryside somewhere, buying what would be a cheaper house and then having cash left over. Isn't that where a lot of the "bank of mum and dad came from" that is now aiding deposits for their children?

If there was no trickle down there would have been no second home HPI in places like Devon, etc. I live in Scotland and there are lots of holiday homes here, near to me is a detached house that is used as a holiday home for 2 weeks a year. The sellers of those holiday homes then buy somewhere else to live. Of course there must be a trickle down.

In less desirable areas it was cheap credit that was more to blame for HPI. Those areas could become ghettos in the future, when jobs go and nobody wants to live there so nobody can sell and escape.

[ccc]

Why do so many relate compare prices to Euros, or Dollars or Gold ? It is not really relevant to 99% of the population. Most people earn pounds and buy a house in pounds.

Comparing to these things strikes me as trying to get those 50% falls that so many want, and expect to happen.

I think these sort of falls will occur. However using comparisons like the above do not really mean much IMO.

[Pluto]

Why do so many relate compare prices to Euros, or Dollars or Gold ? It is not really relevant to 99% of the population. Most people earn pounds and buy a house in pounds.

Comparing to these things strikes me as trying to get those 50% falls that so many want, and expect to happen.

I think these sort of falls will occur. However using comparisons like the above do not really mean much IMO.

You have to look at the big picture to see what is going on. If you stand back and look you will see yourself getting poorer and more reliant on the state. You don't have to own a house, but you do have to purchase food and energy, and compared to the costs of the these basic items houses have collapsed in price.

Everyone on this site is a housing bull. There are no bears on this site at all. The so called bears on this site just want prices to decline so they can buy, it is a timing issue to them. I on the other hand do not and never want to own a pile of crumbling bricks anywhere in the UK.

Anyway, the real issue is that the pound is being thrown in the gutter to support the globalists' agenda of slavery for the masses by way of debt.

[RichM]

So the houses i am seeing still on sale in my area after two years and at an asking price 30% less are all in my mind. Will have to go the the doctors.

I'm glad there's bargains in your area, but we are still getting the same old "you're mad to not be buyng now" looks from people. Plus the area we want to move to is pretty busy right now. A lot of people still believe in property it seems, and people are looking for more green shoots in the housing market as if it's inevitable that it will recover quickly.

[winkie]

I'm glad there's bargains in your area, but we are still getting the same old "you're mad to not be buyng now" looks from people. Plus the area we want to move to is pretty busy right now. A lot of people still believe in property it seems, and people are looking for more green shoots in the housing market as if it's inevitable that it will recover quickly.

Once the people who can buy have bought and those who can afford to buy have bought...the cash will have gone and there will be even more debt to contend with and even less money in the community to spend on growth....high property prices will be our downfall.

[juvenal]

The sellers of Vine Cottage would be pleased to know there was no 07-09 Crash, I'm sure

http://www.houseprices.co.uk/e.php?q=BH15+2DS

[Mammon]

Now when are you going to finally admit defeat?

The bears will have to admit defeat when prices go above peak, about 190K or whatever the exact UK average was.

Before that they can still live in hope.

[Pluto]

These threads are getting weaker and weaker week by week.

The powerhouse HPC posters have left the building. They know it's over.

There wasn't a crash and only an idiot would spout junk about there being one around the corner. Houses are selling big time again. Every single aspect of the housing market has not only picked up it's busy.

Now when are you going to finally admit defeat?

You tried to talk up a crash. You nearly made it but the rules all changed.

It's over. Get on with your lives and start saving.

House price inflation is over and dead. Housing as an asset class in the UK is over and dead. What's next is increased taxation and higher interest rates to look forward to. The globalists have thrown everything trying to increase house prices, or more correctly debt, but it ain't happening. The best they can do is to stop the nominal prices of houses from collapsing. Anyone with a mortgage is going to feel the noose tighten - and tighten it will.

[Executive Sadman]

Some bear food...

http://www.rightmove.co.uk/property-for-sa...x%3D36%26y%3D24

Last sold 2006 for £249995.

Although to be fair i think theres some sort of fraud going on there as an identical house next door went for £209995 at a similar date.

[IMHAL]

These threads are getting weaker and weaker week by week.

The powerhouse HPC posters have left the building. They know it's over.

There wasn't a crash and only an idiot would spout junk about there being one around the corner. Houses are selling big time again. Every single aspect of the housing market has not only picked up it's busy.

Now when are you going to finally admit defeat?

You tried to talk up a crash. You nearly made it but the rules all changed.

It's over. Get on with your lives and start saving.

No point really - to save 20% deposit on a £200k family house for the average bloke on £25k would take about 10 years - and this would be saving hard - by which time the average bloke would have lost the will to live.

Might as well spunk it up on fags, booze and good time girls.

The market only really worked when the deposit required was ZERO % down and liar loan based on 3X ficticious salary.

The only people buying now are those that have the means (a small percentage of the market). Or those whith really high salaries and they are buying rabbit hutches.

Unless the government start to give away deposits for free or subsidising FTB's to the tune of 25% of market value then the markets is going nowhere after the last suckers have been fleeced.

[moneyfornothing]

No point really - to save 20% deposit on a £200k family house for the average bloke on £25k would take about 10 years - and this would be saving hard - by which time the average bloke would have lost the will to live.

Might as well spunk it up on fags, booze and good time girls.

The market only really worked when the deposit required was ZERO % down and liar loan based on 3X ficticious salary.

The only people buying now are those that have the means (a small percentage of the market). Or those whith really high salaries and they are buying rabbit hutches.

Unless the government start to give away deposits for free or subsidising FTB's to the tune of 25% of market value then the markets is going nowhere after the last suckers have been fleeced.

Dont give them iideas..